April 19, 2024

At Chase, Top Ranks Get a Big Shake-Up

Mr. Dimon has prided himself on the stability of his core group of senior leaders, many of whom have worked alongside him for over a decade at Citigroup and then Bank One of Chicago. But amid an effort to repair its mortgage business and restructure its international activities, Mr. Dimon moved aside two of his most loyal lieutenants while elevating three top managers he did not even know before coming to JPMorgan in 2004.

In an interview, Mr. Dimon framed the changes as part of his effort to groom several senior executives but played down the impact of the moves in the bank’s closely watched succession race. At 55, Mr. Dimon expressed no intentions of leaving.

“Management changes take place when they take place,” he said. But inside JPMorgan’s Park Avenue offices, rumors of a coming management shake-up had been swirling for months — especially as the problems in its mortgage unit worsened. Some see this shake-up as part of Mr. Dimon’s plans to clean up that business.  

Charles W. Scharf, who stepped down as the head of Chase’s mortgage and retail banking operations, will become a partner in its One Equity Partners, the bank’s tiny private equity group. Mr. Scharf, hired by Mr. Dimon out of college in the late 1980s, followed him to Citigroup and Bank One and was considered a potential successor.

“It’s no different than a lot of people going to private equity shops,” Mr. Dimon claimed. “It just happens to be here.”

Mr. Scharf’s duties will be absorbed by other members of Mr. Dimon’s leadership team. Todd Maclin, the head of Chase’s commercial bank, will take on additional responsibilities overseeing the bank’s branch network and small-business banking operations. Gordon A. Smith, the head of Chase Card Services, will add the auto finance and student lending units to his portfolio, as well as oversee the consumer bank’s branding efforts.

Neither was part of Mr. Dimon’s inner circle, but earned his trust with their strong performance during the crisis.

David Lowman, the head of the bank’s mortgage unit who reported to Mr. Scharf, was dismissed on Tuesday, according to an internal memorandum. His exit had been telegraphed earlier this year when Frank J. Bisignano, the bank’s chief administrative officer, was given the additional responsibility of supervising Chase’s mortgage operations.

Mr. Dimon also announced that Heidi Miller, another executive who worked alongside Mr. Dimon since their days at Citigroup, would retire from the company in early 2012. James E. Staley, the head of JPMorgan’s investment bank, will take over her duties coordinating the bank’s expansion plans in faster-growing markets overseas. Mr. Staley’s promotion was also one of an executive who did not start out in Mr. Dimon’s inner circle.

The reorganization almost certainly will turn attention to the race to identify a successor for Mr. Dimon. Mr. Staley, who has had a string of success running JPMorgan’s investment bank and the asset management division, has been viewed as the most likely immediate choice, although at 54, he is only a few months younger than Mr. Dimon.

A younger corps of executives, most in their 40s, is also on the list, including Michael J. Cavanagh, the bank’s former finance chief who now runs treasury services; Matthew E. Zames, the head of fixed income in the investment bank; Mary Erdoes, the head of asset management; and Douglas L. Braunstein, the chief financial officer.

The job switch for Mr. Scharf, once considered a charter member of that club, could take him out of the running.

Although Mr. Scharf helped engineer several deals to expand Chase’s footprint, including the takeover of Washington Mutual during the 2008 financial crisis, an overly aggressive expansion into home equity and mortgage lending swamped the business with losses. Improper foreclosure practices have drawn fire from Washington, and were one of Mr. Dimon’s rare missteps.

Mr. Dimon said Mr. Scharf had asked to do something entrepreneurial and completely different a year ago.

“I think he is looking forward to not working for me,” he joked.

Article source: http://feeds.nytimes.com/click.phdo?i=432fe7238fbe4e83dad68e7bedfd5c98